In re SSA Bonds Antitrust LitigationREPLY MEMORANDUM OF LAW in Support re: 540 MOTION to Dismiss the Second Consolidated Amended Class Action Complaint. . DocumentS.D.N.Y.March 13, 2019IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re SSA Bonds Antitrust Litigation : : : : : : : 1:16-cv-03711 ORAL ARGUMENT REQUESTED DEFENDANT SHAILEN PAU’S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF HIS MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 1 of 15 Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 2 of 15 ii TABLE OF AUTHORITIES Cases Page(s) Asahi Metal Indus. Co. v. Sup. Ct. of Cal., 480 U.S. 102 (1987) .................................................................................................................10 Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120 (2d Cir. 2002).......................................................................................................8 Beach v. Citigroup Alt. Invs. LLC, No. 12-cv-7717, 2014 WL 904650 (S.D.N.Y. Mar. 7, 2014) ................................................7, 8 Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68 (2d Cir. 2018).................................................................................................7, 8, 9 Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158 (2d Cir. 2010).......................................................................................................8 Dixon v. Mack, 507 F. Supp. 345 (S.D.N.Y. 1980).............................................................................................9 Gmurzynska v. Hutton, 257 F. Supp. 2d 621 (S.D.N.Y. 2003) ......................................................................................10 In re Braskem S.A. Sec. Litig., 246 F. Supp. 3d 731 (S.D.N.Y. 2017) ........................................................................................7 In re Dental Supplies Antitrust Litig., No. 16-cv-696, 2017 WL 4217115 (E.D.N.Y. Sept. 20, 2017) .................................................5 Jung v. Ass’n of Am. Med. Colleges, 300 F. Supp. 2d 119 (D.D.C. 2004) ...........................................................................................8 Laydon v. Bank of Tokyo-Mitsubishi UFJ Ltd., No. 12-cv-3419, 2017 WL 1113080 (S.D.N.Y. Mar. 10, 2017) ................................................6 Matthews v. Brookstone Stores, Inc., 469 F. Supp. 2d 1056 (S.D. Ala. 2007)......................................................................................8 Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049 (9th Cir. 2008) ...................................................................................................4 Monica Textile Corp. v. S.S. Tana, 952 F.2d 636 (2d Cir. 1991).......................................................................................................9 Park West Galleries, Inc. v. Franks, No. 12-cv-3007, 2012 WL 2367040 (S.D.N.Y. June 20, 2012) ..........................................9, 10 Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 3 of 15 iii Segal v. Bitar, No. 11-cv-4521, 2012 WL 273609 (S.D.N.Y. Jan. 30, 2012) ...................................................8 Selman v. Harvard Med. Sch., 494 F. Supp. 603 (S.D.N.Y. 1980).............................................................................................8 Tamam v. Fransabank SAL, 677 F. Supp. 2d 720 (S.D.N.Y. 2010) ........................................................................................2 Waldman v. Palestine Liberation Org., 835 F.3d 317 (2d Cir. 2016).......................................................................................................2 Rules Fed. R. Civ. P. 4(k)(2)......................................................................................................................2 Statues C.P.L.R. § 302..................................................................................................................................2 Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 4 of 15 1 Defendant Shailen Pau respectfully submits this reply memorandum of law in further support of his motion to dismiss the SAC1 for lack of personal jurisdiction. Mr. Pau also joins in the Dealer Defendants’ reply memoranda of law in further support of their motions to dismiss. PRELIMINARY STATEMENT Plaintiffs’ fourth attempt to plead a viable claim against Mr. Pau, a U.K. resident, suffers from the same dispositive jurisdictional flaw as their prior three: Plaintiffs have not plausibly alleged any connection between their claims and Mr. Pau’s alleged forum contacts, much less the requisite “substantial connection.” Unable to show that any Plaintiff was plausibly harmed by any of Mr. Pau’s alleged forum contacts, Plaintiffs resort to trying to impute the alleged forum contacts of others on to Mr. Pau. This effort fails, however, for a variety of reasons as set forth below, including because Plaintiffs have not plausibly alleged that Mr. Pau directed or controlled any of their purported forum activities. Therefore, the SAC should be dismissed as to Mr. Pau both because it fails to state a viable antitrust claim and for lack of personal jurisdiction. ARGUMENT I. PLAINTIFFS HAVE FAILED TO ALLEGE PERSONAL JURISDICTION OVER MR. PAU UNDER EITHER THE N.Y. LONG-ARM STATUTE OR RULE 4(k)(2) A. Mr. Pau’s Alleged Contacts With New York and the United States Are Insufficient to Support the Exercise of Personal Jurisdiction Over Him Plaintiffs have alleged only a handful of contacts between Mr. Pau and this forum to support their claim of personal jurisdiction over him: 1 Defined terms have the same meaning as in Mr. Pau’s opening brief (“Br.”) (Dkt. 541). Plaintiffs’ Consolidated Opposition to Defendants’ Motions to Dismiss for Lack of Personal Jurisdiction and Improper Venue (Dkt. 579) is cited herein as “Opp.”, and the Class Action Plaintiffs’ Consolidated Opposition to Defendants’ Motions to Dismiss for Failure to State a Claim (Dkt. 578) is cited herein as “Merits Opp.” Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 5 of 15 Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 6 of 15 3 3 See MTD Decision, slip op. 16 (“[T]he fact that Plaintiff may have traded in the same 24 hour period as traders discussed manipulation is simply too thin a basis for the Court to infer that it is plausible that the traders’ employers caused the Plaintiff actual damages.”). Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 7 of 15 Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 8 of 15 5 and therefore, Plaintiffs’ claims cannot possibly have arisen from it. See In re Dental Supplies Antitrust Litig., No. 16-696, 2017 WL 4217115, at *6 (E.D.N.Y. Sept. 20, 2017) (“[P]laintiffs’ claim cannot arise from Burkhart’s sales to New York dentists because Burkhart did not make any sales to any named plaintiff in New York.”); see also Br. 11 (citing cases). 3. Plaintiffs have failed to demonstrate a nexus between any of Mr. Pau’s other alleged N.Y.- or U.S.-based contacts and their claims Plaintiffs are left with their allegations that Mr. Pau periodically communicated with colleagues in Credit Suisse’s New York office These allegations are of no help to Plaintiffs because there is no suggestion that Mr. Pau engaged in any Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 9 of 15 6 anticompetitive conduct, or that any Plaintiff was harmed, in connection with any of these alleged contacts. See Laydon v. Bank of Tokyo-Mitsubishi UFJ Ltd., No. 12-cv-3419, 2017 WL 1113080, at *4 (S.D.N.Y. Mar. 10, 2017) (finding that an alleged trip to the forum was irrelevant for jurisdictional purposes because the plaintiffs pled “no facts to support their allegation that the trip was used to ‘plan[] their manipulation’”). B. Plaintiffs Cannot Avoid the Requirements of the N.Y. Long-Arm Statute and Rule 4(k)(2) Through Allegations of an Implausibly Far-Reaching Conspiracy Presumably because they recognize that they cannot establish personal jurisdiction over Mr. Pau based on the benign nature of his other purported forum activities, Plaintiffs seek to transform those activities into more than they were by arguing that “there was no such thing as a USD SSA marketing push, pricing decision, or transaction that was not an act in furtherance of the conspiracy.” Opp. 73. Plaintiffs assert that because none of the Individual Defendants-Mr. Pau included-engaged in any “untainted USD SSA bond business,” that touched this forum is sufficient to confer jurisdiction. Id. This argument fails for at least three reasons. First, Plaintiffs’ attempt to paint the alleged conspiracy so broad as to render every act undertaken by Mr. Pau-and every other Individual Defendant-as being in furtherance of it, see Opp. 69, 73, is implausible. See Merits Br. 25-43; Merits Reply 20-36. Among other things, Plaintiffs have not alleged any plausible means for Defendants to have effectuated such an all- encompassing conspiracy, Second, Plaintiffs’ assertion that there was “no such thing” as an act “not . . . in furtherance of the conspiracy,” Opp. 73, is not supported by the SAC. Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 10 of 15 7 Finally, this argument is a transparent attempt by Plaintiffs to focus attention away from Mr. Pau’s actual alleged forum contacts and onto their implausible conspiracy theory. However, Plaintiffs cannot avoid the settled requirement that, to establish jurisdiction over Mr. Pau, they must demonstrate a causal relationship between their claims and Mr. Pau’s specific alleged forum contacts through incantations of a wide-ranging conspiracy. C. Plaintiffs Cannot Rely on Transactions in Which They Allegedly Engaged With Credit Suisse, But Have Not Tied to Mr. Pau Lacking a basis to establish jurisdiction over Mr. Pau through his own alleged forum contacts, Plaintiffs seek to rely-improperly-on transactions in which they purportedly engaged with his former employer, Credit Suisse, but which they have not tied to Mr. Pau. Opp. 69-70. Plaintiffs cannot impute such transactions to Mr. Pau, however, absent plausible allegations that he directed or controlled them. See Charles Schwab Corp. v. Bank of Am. Corp., 883 F.3d 68, 86 (2d Cir. 2018). While Plaintiffs assert that Mr. Pau “set[,] approved and priced” every SSA bond transaction executed by Credit Suisse in the United States, Opp. 70, there is no factual support for this (implausible) claim in the SAC. This is the kind of “sweeping and conclusory” statement that courts routinely reject as insufficient to support a finding of personal jurisdiction. See In re Braskem S.A. Sec. Litig., 246 F. Supp. 3d 731, 770 (S.D.N.Y. 2017). D. Plaintiffs Cannot Rely on Alleged Injuries Suffered by Absent Class Members Having failed to identify any plausible harm that they suffered as a result of Mr. Pau’s own alleged forum contacts, Plaintiffs next seek to rely on purported injuries suffered by absent class members. Opp. 34-39. It is settled law, however, that a defendant’s alleged “[c]ontacts with unnamed class members may not be used as a jurisdictional basis[.]” Beach v. Citigroup Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 11 of 15 8 Alt. Invs. LLC, No. 12-cv-7717, 2014 WL 904650, at *6, *11 (S.D.N.Y. Mar. 7, 2014); see Selman v. Harvard Med. Sch., 494 F. Supp. 603, 613 n.6 (S.D.N.Y. 1980) (“[The] named class representative himself must satisfy all jurisdictional prerequisites before the action can go forward.”), aff'd 636 F.2d 1204 (2d Cir. 1980).6 Segal v. Bitar, No. 11-cv-4521, 2012 WL 273609 (S.D.N.Y. Jan. 30, 2012), on which Plaintiffs rely, is not to the contrary. In Segal, the court found that the exercise of personal jurisdiction over the defendant was appropriate based on the standard New York long-arm analysis, concluding that the cause of action “ar[ose] from” the defendant’s contacts with New York because the named plaintiff used the defendant’s services in New York and was injured as a “direct result.” Id. at *5. While the court noted that “other New York residents” were also injured, the court did not rely on those injuries as the basis for its exercise of jurisdiction over the defendant, much less hold that injuries to unnamed class members could confer jurisdiction.7 E. Plaintiffs Cannot Rely on the Alleged Forum Contacts of Mr. Pau’s Alleged Co- Conspirators or Agents Plaintiffs rely on Schwab to argue that the alleged forum contacts of Mr. Pau’s purported co-conspirators can be imputed to him. Opp. 60-64. But Schwab did not overrule sub silentio decades of Second Circuit precedent holding that a co-conspirator’s conduct can be imputed to a defendant for jurisdictional purposes only if, consistent with traditional agency principles, the defendant was aware of, benefited from, and directed or requested the co-conspirator’s forum 6 See also, e.g., Matthews v. Brookstone Stores, Inc., 469 F. Supp. 2d 1056, 1067 n.17 (S.D. Ala. 2007) (“The law is clear that a plaintiff cannot rely on acts allegedly perpetrated against other putative class members to establish personal jurisdiction . . . .”); Jung v. Ass’n of Am. Med. Colleges, 300 F. Supp. 2d 119, 136 n.8 (D.D.C. 2004) (“[P]laintiffs cannot rely on alleged injury to putative plaintiffs in order to meet the in-District injury requirement.”). 7 The other two cases Plaintiffs cite, Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 167 (2d Cir. 2010), and Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 128 (2d Cir. 2002), are not class actions and therefore do not address whether the alleged contacts of absent class members can provide a basis for exercising personal jurisdiction over a defendant. Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 12 of 15 9 actions. See Br. 18 (citing cases); see generally Monica Textile Corp. v. S.S. Tana, 952 F.2d 636, 641 (2d Cir. 1991) (finding it “inconceivable” that a prior Second Circuit decision “would, in dictum, overrule sub silentio a long line of Second Circuit precedent”). Plaintiffs’ assertion that interpreting Schwab to exclude agency principles from the analysis “would not overrule decades of . . . precedent,” Opp. 63, is incorrect; indeed, the case they cite for that proposition, Dixon v. Mack, 507 F. Supp. 345, 350 (S.D.N.Y. 1980), recognized that “where [] courts have been asked to exercise jurisdiction . . . on the basis of the acts of co-conspirators . . . , they have continued to impose requirements related to agency concepts.” Although Schwab discussed in dictum a standard for conspiracy jurisdiction that does not incorporate agency concepts, the court did not adopt it or even apply it, much less reach the question of whether the application of such a standard would comport with due process. 883 F.3d at 87. Rather, the court avoided the issue by finding that the plaintiff had failed to allege a prima facie case for conspiracy jurisdiction. Id. at 88. Here, too, this Court can avoid the issue, as Plaintiffs have similarly failed plausibly to allege a prima facie case for conspiracy jurisdiction. See Merits Br. 25-43; Merits Reply 20-36. Separately, Plaintiffs cannot impute the actions of U.S.-based salespeople to Mr. Pau. Cf. Opp. 74-75. The acts of a third-party can be imputed to a defendant for jurisdictional purposes only if an agency relationship existed between them. See Schwab, 883 F.3d at 85-86. Plaintiffs have not alleged such a relationship between Mr. Pau and any of the U.S.-based salespeople. II. PLAINTIFFS HAVE FAILED TO ALLEGE JURISDICTION OVER MR. PAU THROUGH THE “EFFECTS TEST” Plaintiffs’ attempt to use the “effects test” as an alternative basis for establishing jurisdiction over Mr. Pau fails because (1) under the “effects test,” a plaintiff must still show that it was harmed by conduct that the defendant “expressly aimed” at the forum, see Park West Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 13 of 15 10 Galleries, Inc. v. Franks, No. 12-cv-3007, 2012 WL 2367040, at *5 (S.D.N.Y. June 20, 2012), and (2) Plaintiffs have not plausibly alleged that any Plaintiff was harmed The effects test is also inapplicable because Plaintiffs have not alleged that Mr. Pau “expressly aimed” any conduct at New York or the United States. Br. 16-17. Plaintiffs assert that Mr. Pau traded in USD SSA bonds and that such bonds are “primarily traded [in the United States].” Opp. 41. At most, however, that establishes only that it was foreseeable that injuries from the alleged conspiracy might occur in this forum. Such foreseeability of harm is insufficient to satisfy the effects test. Br. 16-17 (citing cases). III. EXERCISING PERSONAL JURISDICTION OVER MR. PAU WOULD OFFEND TRADITIONAL NOTIONS OF FAIR PLAY AND SUBSTANTIAL JUSTICE Even if Plaintiffs could establish a basis for jurisdiction over Mr. Pau, the burden that he would face in litigating this case overseas would counsel against its exercise. See Asahi Metal Indus. Co. v. Sup. Ct. of Cal., 480 U.S. 102, 114 (1987) (the burden of litigating in a foreign court is given “significant weight” in the due process analysis). Plaintiffs attempt to minimize this burden by asserting that Mr. Pau is “comfortable traveling to New York,” and will likely have “to travel to the United States anyway to defend [himself] against the [DOJ] inquir[y].” Opp. 78. Plaintiffs’ speculation, based on years-old media reports, about what Mr. Pau might have to do in connection with a government inquiry, and hypotheses about what he is “comfortable” doing, are entitled to no weight. See Gmurzynska v. Hutton, 257 F. Supp. 2d 621, 631 (S.D.N.Y. 2003). CONCLUSION For the reasons set forth above and in Mr. Pau’s opening brief, the SAC should be dismissed with prejudice as against Mr. Pau. Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 14 of 15 11 Dated: New York, New York March 13, 2019 Respectfully Submitted, MORVILLO ABRAMOWITZ GRAND IASON & ANELLO P.C. By: /s/ Christopher B. Harwood Christopher B. Harwood Richard F. Albert Nicole L. Buseman 565 Fifth Avenue New York, New York 10017 Tel. 212.856.9600 Fax. 212.856.9494 charwood@maglaw.com ralbert@maglaw.com nbuseman@maglaw.com Attorneys for Defendant Shailen Pau Case 1:16-cv-03711-ER Document 600 Filed 03/13/19 Page 15 of 15